Politicians in the European Union are using an obscure anti-trust law as jurisdiction to give them legal leverage to curtail hedge funds and other speculators, and rein in oil and food prices on the Continent.
This could spell trouble, says Ambrose Evans-Pritchard.
"Any such attempt to restrict the futures and derivatives markets would have a major impact on the City of London and Dublin's financial industry. It's far from clear whether Britain could muster a blocking alliance in the current anti-market climate," Evans-Pritchard writes in The Telegraph.
If enacted, the policies may also stifle American hedge funds too.
According to Evans-Pritchard, politicians have been "scouring" through law casebooks, and have found Article 81 of the European Union treaty, which prohibits anti-competitive deals between businesses in Europe.
The governments of Italy, France and Germany, particularly the Social Democratic Party, are "agitating" for legal action against "asset-stripping locusts," Evans-Pritchard writes, explaining this term is being used to describe "private equity groups and hedge funds."
If the policy moves are successful in the European Commission, or European Parliament, or European Court for Justice, they could wreak havoc on the financial industry in London, Evans-Pritchard writes.
The socialists are apparently enjoying something of a resurgence, thanks to the global financial crises of the last few months. "Tony Robinson, chief spokesman for the Socialist Group in the European Parliament, said the capitalist system had disgraced itself and must now face much stricter regulation," writes Evans-Pritchard.
Evans-Pritchard believes that EU lawyers can gain leverage outside of the EU, using the same sort of tactics they used seven years ago to stop the Honeywell-GE merger from being approved for business in Europe. That policy has cost the new company all of its European sales.
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